No humble Brexit pie for Irishman behind half of UK’s sandwiches

Patrick Coveney not surprised, but much of corporate Ireland concerned about volatility


Corporate Ireland has been left reeling as the UK shocked financial markets by opting to leave the EU.

But there’s no need for the Irishman behind half of all sandwiches sold on Britain’s high streets to dig into a plate of humble pie.

Patrick Coveney, chief executive of Greencore, which supplies everything from quiches to prepared pasta meals correctly declared last week that the UK was heading for the EU’s departure gates.

“Unfortunately, I am not surprised by the outcome,” said Mr Coveney. “Even [on Thursday] when the financial markets expected the Remain camp would win, I didn’t see the evidence on the ground.”

Irish shares plunged as much as 17 per cent on Friday to their lowest level in almost a year-and-a-half, while sterling tumbled against the euro and, to a greater extent, against the dollar as financial markets were caught off-guard by UK’s decision. Analysts predicted on Friday that Irish economic forecasts and earnings estimates for companies on the Iseq face downgrades over the coming weeks as the impact of Brexit begins to emerge.

Near term

“In the near term there’s going to be volatility in the markets, with uncertainty over the implications for exchange rates and interest rates,” said Mr Coveney. “Here in Ireland, I think politically we’ll need a very well-thought-through integrated national response. We’ll need to maintain our very strong links and influence within the EU and, secondly, we need to maintain the enormously important business, cultural, and even physical connections we have to the UK.”

Even though Greencore’s UK food-to-go division accounts for over 40 per cent of the group’s annual sales, Mr Coveney said the company is insulated from currency movements as it manufactures in Britain what it sells in the country.

Paper packaging giant Smurfit Kappa, which joined the FTSE 250 in London this week, said it does “not expect any material impact to our day-to-day business” as a result of Brexit.

“The actual impact over the coming months will be a function of how the decision impacts overall growth levels across Europe,” Smurfit said.

Elsewhere, Fiona Muldoon, chief executive of FBD Holdings, Ireland’s only publicly-traded insurance company, said the UK decision is “a terrible, terrible pity.”

“My immediate concerns are about the financial volatility [Brexit has sparked] and the impact on our customers, as we have a significant share of the farm and agri-business sector and SMEs market in Ireland,” she said.

“Irish businesses have been through a very difficult decade, with the collapse of the economy during the financial crisis and confidence is fragile. Anything that adds to uncertainty for them is not a good thing.”

The UK is Ireland’s closest trading partner, with over 40 per cent of the State’s food exports alone going to Britain. The sterling fell by more than 5 per cent against the euro, to $1.2375 as currency markets reeled in light of the referendum result.

Defining work

Ms Muldoon, who was previously head of banking and insurance regulation at the Central Bank between 2011 and 2014, said it “is going to be the defining work of this government how it deals with [Brexit].”

She added that this will push other items on the Government’s agenda, including insurance policy reform, down the list of priorities.

Ryanair’s chief marketing officer Kenny Jacobs described the outcome of the referendum as a “shock,” adding that he expects air fares to rise across Europe as a result, making travel more expensive and difficult.

Mr Jacobs said the vote has sparked uncertainty over the future of Northern Ireland and Scotland within the UK.

AIB, the country’s second largest lender by assets, said: “While it is business as usual for most of our customers in both the Republic of Ireland and the UK, the uncertainty has created market volatility, particularly for customers exposed to sterling.’’